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Back to back (or head and counter) credit

A documentary credit (counter) taken out by a seller (importer) to allow purchase of goods required to meet a sale covered under original (head) credit. Under this type of arrangement the first credit (head) can be offered in support of security to the importers bank. As applicant for the second credit (counter) the importer is responsible for reimbursing the bank for payment made under it, regardless of whether or not they are paid under the original credit. Should be distinguished from a transferable credit.

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